LOTTERIES AMENDMENT BILL PRESENTATION TO THE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY 23 JULY 2013 PRESENTERS MS. Z NTULI – DDG CCRD MR. M NETSHITENZHE – CD - POLICY AND LEGISLATION MS. C MAKAEPEA – DIRECTOR: REGULATED INDUSTRIES MR. N MASHAMAITE – DEPUTY DIRECTOR: REGULATED INDUSTRIES

Purpose To brief the Portfolio Committee on Trade and Industry on the Lotteries Amendment Bill

Background The Lotteries Act came into effect in 1997. In 2007 a study was conducted on the performance and the challenges. In 2009 the Minister commissioned the Gambling Review. In 2010 a Roundtable was conducted and chaired by the Minister. In 2010 a Working Group was established and chaired by DDG, Ms Zodwa Ntuli. In July 2010 Minister issued Regulations to provide direction on the distribution of funds. In September 2010 the Gambling Review Commission presented its report to the Minister. In 2010 a Regulatory Impact Assessment was conducted on the Policy proposals. The report by the Portfolio Committee on Trade and Industry on the GRC was concluded in March 2012. In June 2011 NLB was requested to have a stakeholder engagement on the issues pertaining to distribution of funds. In May 2013 the draft Policy and Bill were taken to Cabinet for wider consultation. The Policy was adopted in April 2013 and the Bill was published on 8 May 2013; comments closed on 7 June 2013. The were no Policy changes to the Bill. The Bill was submitted to the State Law Advisor for certification. The Bill was certified on 10 July 2013 and will be introduced into Parliament this week (July 2013).

Policy Issues Accountability of Distribution Agencies (DAs) Quorum and conflict of interest Simplification of the process Categorisation of grants Disbursement of the funds Size of the Board Differentiation of NLB & the National Lotteries Board Role of the Minister and that of the Board Proactive funding Grants through conduits Internal review mechanism of decisions Auditing of financial statements

Objectives of the Bill To outline the Lotteries Amendment Bill so as to amend the Lotteries Act, Act No. 57 of 1997 (the Act). To provide for the establishment of a National Lotteries Commission. To provide for the extension of the powers of the Commission. To provide for the licensing of Organ of State to conduct National Lottery. To provide for a clear accountability process for Distributing Agencies. To eliminate overlapping of functions between the Minister and the Board. To provide for the removal of Reconstruction and Development Programme (RDP) as a category.

Conflict of Interest The Bill has enhanced the provisions relating to staff members, Board Members and Distribution Agencies (DAs). The DAs will be appointed on a full-time bases and will be governed by the Policies of the NLB. (Sections 2(F); 3(B); 26(D))

Establishment of National Lotteries [Board] Commission The Act uses the word “Board” interchangeably referring to both the National Lotteries Board and the ‘Board’ that has an oversight role. To address this issue: Section 2 of the principal Act is amended to establish a Commission to be known as the National Lotteries Commission. Section 2 (1) The Board, in consultation with the Minister must appoint a person with suitable qualifications and experience as Commissioner of the Commission. Section 2B (1) The Commissioner may appoint such staff members as may be necessary to efficiently and effectively perform the functions and duties of the Commission on such terms and conditions determined by the Board and approved by the Minister in consultation with the Minister of Finance. Section 2D (2)

Extension of the powers of the Commission The Commission’s main functions are to ensure that: The National Lottery and sports pools are conducted with all due propriety and strictly according to the Constitution, this Act, all other applicable law and licence for the National Lottery together with any agreement pertaining to that licence. Section 2A(2) The interests of every participant in the National Lottery are adequately protected. Section 2A (2)(b) The Commission promote public knowledge and awareness about the lotteries and provisions of this Act. Section 2A(5)(i)(ii) Exercise any other function as delegated or directed by the Minister or Board. Section 2A(7)

Licensing of Organ of State to conduct National Lottery The appointment of Organ of State to conduct the National Lottery in the event that the Minister decides on justifiable grounds not to issue a licence as contemplated in section 13. Section 13A(1) The Minister may, after consultation with the Board, licence or authorise an Organ of State to conduct the National Lottery for a period not exceeding eight (8) years. Section 13A(1) In deciding whether justifiable grounds contemplated in sub-section (1) exists, the Minister may take into consideration national government plans or priorities which are not achieved if a third party is appointed. Section 13A(2)

Accountability process for Distributing Agency The Distributing Agency will be appointed and dismissed by the Minister after consultation with the Board. Section 26B(2) read with 26D(9)(c) The members of the Distributing Agency will be appointed for a period of five (5) years which may be renewed once, to serve on a full time basis. Section 26B(4) The Distributing Agency must adhere to policy directives, code of ethics approved by the Board and applicable within the public sector. Section 26B(1) The Distributing Agency shall be responsible for receiving, evaluating, verifying, adjudicating applications for grants and distributing grants to good causes. Section 26B(1) The number of the Distributing Agency members in each category shall be determined by the Minister after consultation with the Board in line with the size of the funds in such categories. Section 26B(3)

Elimination of overlapping of functions between the Minister and the board The provisions of the Act give an impression on literal interpretation that both the Board and the Minister have equal powers in relation to varying conditions of the licence. The Act often refers to the Minister or the Board in various critical sections that clearly should not be the case. All anomalies in respect of the roles and functions of the Minister and the Board were identified and clarified. Refer to Section 13 (a), (c)(2) and (b), Section 14 (1) and (c) Section 15, Section 16(a)(1) and (b), Section 17 (a)(1) and (b)(2), Section 18 (a)(1), (b) and (c)(3).

Removal of RDP as a category entitled to be allocated money of the fund The Amendment Bill has removed the Reconstruction and Development Programme (RDP) as it has been dormant. Section 23 (RDP removed) The miscellaneous category will include proactive funding. Funding through conduits has been retained but limited to exceptional circumstances.

CRITICAL Comments from stakeholders On 08 May 2013 the dti published the Lotteries Amendment Bill for broader public consultation and the submission of comments closed on 07 June 2013. Comments received from stakeholders raised the following concerns on the Lotteries Amendment Bill (the dti’s responses are in bold): Organ of State being appointed to run the Lottery – it will remove the industry expertise that come with a private sector operator and will lead to poor management , common with State Owned Entities (SOEs). the dti feels the Organ of State should remain as the said Organ would only be appointed if private appointees fail to realise national objectives. The professionalisation of the Distributing Agencies - their independence cannot be guaranteed against interference of the Board and politics. The Distributing Agency will only account to the Board on administration issues and not on their adjudication functions. The proposed internal review mechanisms - it is felt that an independent tribunal or ombudsman should be appointed as the proposed internal review mechanism will not guarantee impartiality because it will be the Board reviewing its own decision. An independent tribunal will come at a high cost, the proposed review mechanism will ensure courts are not resorted unnecessarily.

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